Namrita Gupta – 190301012 (Group 2)

Individual Assignment (Q1 to Q4)

Question 1. How has the advent of Reliance Jio impacted the growth of Internet consumption in
India and what future scenario can be depicted.

Answer: Reliance Jio was launched in 2016 with an investment of $40 billion to provide telecom
services in India and offered voice and internet services on low prices that those of already existing
competitors like Bharti Airtel and Vodafone-Idea. Reliance Jio services were highly accepted by the
customers and within a span of 4 years, Jio acquired 34% of the total market share higher than those
of its competitors as on JAn2020.

Jio adopted the policy of cost leadership and offered voice, data and internet services on low prices
and free data to customers which made it top ranking telecom company in India.

With differentiated services like MyJio, JioTV, JioCinema, JioMoney, JioNews and JioSaavn offered by
Jio Platforms, Reliance Jio succeeded in attracting huge customer base.

Smartphones are now much affordable in India and when low cost data and internet services are
provided, India's internet consumption started increasing. Jio made it possible for everyone to afford
and access cheap data which increased the growth in Internet services and appetite for social media.

As per a recent report, India was poised to have over 900 million internet users due to the increased
penetration of affordable smartphones and cheaper internet plans, and would also have around 2.1
billion internet-connected devices by 2023.

Further to this, COVID-19 pandemic has accelerated digital adoption in India as increasing number of
people shop online and small businesses digitised. In a recent report, Morgan Stanley said crediting
Reliance Jio's 4G telecom services for spurring the digital economy by propelling internet usage in the
country. In the report on ‘India's Digital Economy in a Post-COVID-19 World’. Morgan Stanley
mentioned that 2020 will likely see increasing online penetration in grocery and will put a few Super
Apps into motion.

Morgan Stanley projected India's 670 million internet users to rise to 914 million by 2027 and online
shoppers to jump to 590 million from 190 million in 2020. While in the past few years digital adoption
in India has been evolving with increasing 4G adoption and rising internet penetration, the overall
transactional base was still small.

The report also mentioned that "The launch of Reliance Jio's 4G telecom services in September 2016
helped spur the digital economy in India as it propelled internet usage in the country, with fast,
reliable, and cheap 4G services leading to significant growth in data usage (especially on music and
video content)".

Morgan Stanley said COVID-19 has relieved some apprehension relating to digital transactions. "We
believe COVID-19 could accelerate the shift to online transactions (such as e-commerce and
payments) and provide a tailwind to growth in India's digital economy".

Hence, there will be huge demand for internet and strong customer base in future.
Question 2. Should Jio Platforms aggressively pitch for 5G adoption in India? How will it benefit the
company?

Yes, Jio is already planning to build its 5G telecom services in India for which it has already invested
huge amount of US$40 billion. With 5G telecom services, there will be huge spike in the adoption of
advanced technologies like Artificial Intelligence, Machine learning, NLP, Blockchain and IoT etc. Jio is
already planning to adopt these technologies like Blockchain and AI for seamless services offerings to
its customers.

In 2003, 3G was the first cellular technology that gave customers the power of internet and opened
up the possibilities of what data could do.

After 10 years, launch of 4G massively improved user experiences with internet for faster download
speeds and opened up the avenues for various applications such as video streaming and interactive
mobile gaming.

5G on the other hand not just promises faster data speeds but will also bring up more transformational
businesses that previous technological leaps. Typical speed of 4G is around 200 Mbps whereas 5G has
provide speed up to 1Gpbs. It will offer greater capacity and much less latency or lag than 4G. This will
ensure that thousands of internet-enabled devices will be connected simultaneously from phones to
IoT sensors.
5G offers:

1. Ultra-low latency – 5G can respond to a command in just 1ms. This makes the technology
ideally suited to mission-critical applications such as autonomous vehicles, where
communication in real time is essential to avoid collisions.
2. Increased capacity - offers greater capacity than earlier network technologies across a larger
frequency spectrum. 5G will support up to 100-fold increase in traffic capacity and network
efficiency compared to 4G enabling users to easily access data services anywhere. 5G provides
the platform to drive IoT connectivity for Industry 4.0 and smart cities.
3. Augmented reality - 5G will act as a catalyst for AR and VR development. Increased
connectivity allows more social, real-time and personalised experiences, including AR-
enhanced live events.
4. Internet of Things - 5G’s low latency and high capacity makes it ideal for connecting all types
of devices or things – whether that’s drones in the workplace or sensors in a wearable product.
5G enables us to connect a whole range of new devices so we can have connected factories,
smart cities and autonomous vehicles.

Implementing 5G in industrial automation will not require any significant alterations to the current
infrastructure. Industries and organizations will look out at how to gain competitive advantage with
this technology. Almost every industry will be benefitted by it. New technologies will evolve with the
deployment of 5G.

1. Driverless automobiles
2. Virtual Reality and augmented reality
3. Cloud Computing
4. The mixed reality concept will change the way a common internet user plays a game today
5. Concepts of Vehicle-to-Everything (V2X) technology will come to reality
6. Doctors will remotely perform critical surgery using robots
7. “Cobots” - The concept of human and machine co-working will be empowered in industry
8. UHD video streams and automated safety systems will be deployed

5G will create significant change and enable innovations and will allow the company to establish real
time interactions with customers and opt for seamless video conferencing with more connected and
efficient network and above all real-time analytics which in turn will result in better customer services
and new business avenues which can inculcate IoT devices and secured payment services through
blockchain. The company will be benefitted with it as Reliance is all set to enter into retail market
segment.

India is already behind the global peers for the trails and implementation of 5G. Indian government
also focused on big sectors for the deployment of 5G – education, agriculture and waste management
and healthcare.

There have been various players gearing up for the implementation of 5G networks in India. With
Reliance Jio ready to invest heavily on 5G spectrum auctions there have been spaces for the external
players like Huawei teaming up with Bharti Airtel and Vodafone-Idea for the same.

On the other hand, Vodafone-Idea and Airtel want the sale of auction to be delayed citing reasons as
underdeveloped infrastructure/ecosystem and stretched finances.
Huawei being a Chinese telecom equipment maker is currently facing global scrutiny over network
security concerns. US has claimed that Huawei’s 5G equipment could be used by China to spy on other
countries, the company however has denied these allegations. Whereas countries like Australia,
Japan, Canada and New Zealand have also barred Huawei.

Such allegations have raised serious concern over data security and privacy. Industry executives said
lack of clarity on whether Chinese vendors Huawei and ZTE can deploy their next generation mobile
communication standard technology in India prompted the government to postpone the spectrum
auction. Further decisions are yet to be taken on this by DoT and cabinet approval.

Question 3. What should Reliance Jio do to repeat its success in the retail business in India and
dislodge the present incumbents Amazon and Walmart/Flipkart to be the number one in e-retail in
India?

The food and grocery market in India are estimated to be around $500 billion in size and the presence
of the online players is very less in this line. This sector is highly dominated by offline retailers which
include both organised and unorganised segments. It is this large market with an equally substantial
presence of customers, which has created the pathway for a partnership between ecommerce players
and the kirana stores.

The supply chain network of the Indian retail industry especially in the food and grocery segment is
very complicated. It is a mix of both organised and unorganised segments which has an interplay of
many elements like logistics, distributors, warehouses and financing.

JioMart is aggressively chasing the grocery markets through which they can reach a large number of
households and work in a way where customers end up buying a lot of services from Reliance itself
including mobile connections, televisions etc. whereas Amazon and Flipkart are still not able to fulfil
the grocery demand.

Reliance operating in its home country has an added advantage to understand Indian customer's
mentality, aspirations and demands. Facebook's investments to use Whatsapp for e-commerce
opportunities with small businesses will be an advantage to Reliance whereas Amazon and Flipkart
can’t compete with Jio-Facebook because they don’t have an edge on data.

JioMart look out for cooperation from Kirana stores. To compete with such competitors, such
collaborations are necessary. Through Whatsapp, there will be significant increase in Peer-to-Peer
payments which will create a price-war.

In long run this deal will rupture entire e-commerce ecosystem in India and counter the competitors
like Flipkart and Amazon. This model will also disrupt the digital payment space like PhonePe, Amazon-
Pay, Paytm etc.

India has a huge customer base for Whatsapp and Facebook around 400 million and 380 million users
respectively, also the highest in the world. Whatsapp is planning to start digital payment services too.

For Reliance to succeed in retail business, it needs to ensure last-mile deliveries with fast and timely
services. It is a price sensitive market, hence there is a need of pricing transparency without any
intermediaries.
Kirana stores may also not give away their profit margins and the offline sector is already dominant
and holds about 75 to 80 percent market share. Reliance Jio can insert themselves into the value chain
and have kiranas act as last mile delivery.

Reliance Jio has to be very particular about pricing strategies in this industry to beat its competitors.
Besides retail, the payments sector could also be targeted. Jio Money have not excelled in India.
However, combining forces may provide Reliance and Facebook with an opportunity to re-enter the
currently fragmented market with greater leverage.

In this potential scenario, Reliance/Facebook could monetise all payment volume transacted through
the app and could also force India’s startup ecosystem to either integrate or compete on the
incremental services.

The aggregate data across both Jio and Facebook would be enormous and provide both an undue
advantage over competition, which include large players like Amazon and Walmart/Flipkart.
Jio/Facebook would be best positioned to launch new products and even unlock high value advertising
revenue.

Question 4. What are the pros and cons of O2O model for retail business in India? Is this the best
marketing/ operational strategy which Reliance Jio can adopt, leveraging its collaboration with
Facebook?

Answer: O2O (offline to online) is an approach to entice customers in an online environment but with
the benefits of offline shopping, which includes testing/touching the product, interacting with store
owner, comparing multiple products and getting real time price details, before finalising an order.
O2O commerce companies use include in-store pick-up of items purchased online, allowing items
purchased online to be returned at store and allowing customers to place orders online while at the
store.

By switching to O2O, retailers can offer benefits of eCommerce but personal interaction and
technology assistance to customers.

The O2O model can serve every type of customer, be it educated or uneducated, or urban or rural.
The most common technique adopted by O2O retail brands is to push users picking their online
purchased items from the nearby retail stores. This also involves allowing customers to place orders
while they are still inside the store.

The O2O model can help retailers delivering better shopping experience and grabbing the underlying
growth opportunity in the market.

Pros:

1. Take on the opportunity of reaching a larger online and social audience to boost in-store sales.
2. Giving a push to the local customers visiting your shop while they are browsing or purchasing
online.
3. While in-store, customers can actually browse and search all your products online and make
better decisions leading to sales.
4. Offering a seamless shopping experience combining both online and offline channels.
5. Offer customers personalised incentives online to push offline sales.
6. Utilise e-reservations to enhance overall customer spending.
7. 24x7 shopping availability for customers and Increase sell-up opportunities for stores
 8. Low cost and hassle-free pickup to customers that nurtures and promotes customer loyalty

Cons:

1. Need to have a strong technological and distribution infrastructure to handle increased

volumes with increased demands of e-commerce growth.
2. Flawless management of inventory and order fulfilment over various localities
3. Available stores in all localities and enough staff to handle all the customers within stipulated
timeline

Reliance has planned to introduce an O2O (offline-to-online) platform to provide packaged consumer
goods and kitchen supplies to the customers using MyJio and JioMoney applications. It is the best
marketing/ operational strategy which Reliance Jio can adopt, leveraging its collaboration with
Facebook because most the e-commerce companies are turning into this model. With advanced
technologies offered by tech giant Facebook, this will be effectively handled by Reliance. In India,
customers rely upon personal interaction and real time product information before making a
payment. 96% of the marketplace prefers the traditional, offline shopping experience. This can be
attributed to reluctance of customers to trust online payment methods, undue shipping charges, the
lack of installation assistance, and difficulty to operate without technology, among others.